Correlation Between Liechtensteinische and Erste Group
Can any of the company-specific risk be diversified away by investing in both Liechtensteinische and Erste Group at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Liechtensteinische and Erste Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Liechtensteinische Landesbank AG and Erste Group Bank, you can compare the effects of market volatilities on Liechtensteinische and Erste Group and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Liechtensteinische with a short position of Erste Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Liechtensteinische and Erste Group.
Diversification Opportunities for Liechtensteinische and Erste Group
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Liechtensteinische and Erste is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Liechtensteinische Landesbank and Erste Group Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Erste Group Bank and Liechtensteinische is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Liechtensteinische Landesbank AG are associated (or correlated) with Erste Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Erste Group Bank has no effect on the direction of Liechtensteinische i.e., Liechtensteinische and Erste Group go up and down completely randomly.
Pair Corralation between Liechtensteinische and Erste Group
Assuming the 90 days trading horizon Liechtensteinische is expected to generate 3.28 times less return on investment than Erste Group. But when comparing it to its historical volatility, Liechtensteinische Landesbank AG is 1.42 times less risky than Erste Group. It trades about 0.04 of its potential returns per unit of risk. Erste Group Bank is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 3,070 in Erste Group Bank on October 23, 2024 and sell it today you would earn a total of 3,078 from holding Erste Group Bank or generate 100.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 98.39% |
| Values | Daily Returns |
Liechtensteinische Landesbank vs. Erste Group Bank
Performance |
| Timeline |
| Liechtensteinische |
| Erste Group Bank |
Liechtensteinische and Erste Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Liechtensteinische and Erste Group
The main advantage of trading using opposite Liechtensteinische and Erste Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Liechtensteinische position performs unexpectedly, Erste Group can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Erste Group will offset losses from the drop in Erste Group's long position.| Liechtensteinische vs. Xeros Technology Group | Liechtensteinische vs. International Biotechnology Trust | Liechtensteinische vs. Anglo Asian Mining | Liechtensteinische vs. Coeur Mining |
| Erste Group vs. LBG Media PLC | Erste Group vs. Kinnevik Investment AB | Erste Group vs. Zinc Media Group | Erste Group vs. Tavistock Investments Plc |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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